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BREAKING: Alameda Credit Union seeks merger

BREAKING: Alameda Credit Union seeks merger

Michele Ellson

Thursday, May 2, 2013 - 11:19

Photo by Michele Ellson.

The Alameda Credit Union is pursuing a merger, citing rising costs, new regulations and a desire to provide more services.

The 76-year-old credit union is seeking approval from state and federal regulators to merge with Redwood City-based Provident Credit Union, and will seek its members’ approval if the regulators sign off, according to a letter the credit union’s leaders sent to members Friday.

“We are a sound financial institution, something we are very proud of given the financial challenges faced by some institutions. At the same time, it is harder each day to provide the increasingly expensive technology options our members need,” says the letter, which was signed by Chief Executive Officer Donald H. Winstead and Michael R. Fassler, president of the credit union’s board of directors.

The letter says the credit union’s leaders sought a merger to fund technology for members, provide more and cheaper loan options, offer a broader array of services and address rising overhead costs and increasingly complex regulations, which it says are posing “a large and growing burden” for smaller credit unions.

“We have been experiencing and evaluating these trends for some time now and to meet your needs, we require additional resources that can only be obtained through a much larger member base,” the letter says.

It says the bank’s leaders worked with a consultant for months and spoke with “many potential merger partners” before settling on Provident. If the merger goes through, the Alameda Credit Union’s members would become Provident members.

The Alameda Credit Union has 3,481 members and assets of $36.1 million, according to the National Credit Union Administration’s 2012 directory. Provident, which was established in 1950 to serve the California Teachers Association, has assets of over $1.5 billion and 95,516 members, the directory shows, and it has 18 Bay Area branches, and the letter says the credit union is “committed” to maintaining a branch on the Island.

The Alameda Credit Union has suffered losses in each of the past three years, tax records show, losing $1.3 million in 2009, $568,650 in 2010 and $194,538 in 2011, the most recent year tax records were available. Alameda’s Financial Benefits Credit Union, which holds about $19.2 million in assets and has 2,368 members, also saw losses during those three years, tax records show.

The Alameda Credit Union’s share growth increased slightly in 2012 while loan growth declined by more than 10 percent. Between 2006 and 2011, credit unions in the same asset class as the Alameda Credit Union – those holding between $10 million and $50 million in assets – saw declines in share and loan growth.

More than 700 credit unions in the United States merged between 2010 and 2012, National Credit Union Administration data show.

Comments

Submitted by Jon Spangler on Thu, May 2, 2013

As a member of Alameda Credit Union since we moved to Alameda in 1997 I am sad to see this necessary step occur, but understand its necessity. If we had a financial and political system that was not controlled by oligarchs in the 0.01% class smaller financial institutions like ACU would not be hurting as they are and they would not need mergers to survive.

When will we take the world financial system away from th people who wrecked it?

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